Surprise, you're an Obamacare loser

From left, David Powner, director of information technology management issues at the Government Accountability Office; Henry Chao, deputy chief information officer for Medicare and Medicaid Services; Frank Baitman, deputy assistant secretary for information technology at the Department of Health and Human Services; Todd Park, U.S. chief technology officer at the White House Office of Science and Technology Policy; and Steve VanRoekel, U.S. chief information officer at the Office of Electronic Government in the Office of Management and Budget, are sworn in to testify before the House Oversight Committee about problems implementing the Obamacare healthcare program, on Capitol Hill in Washington, Wednesday, Nov. 13, 2013. (AP Photo/J. Scott Applewhite)
The Associated Press

From left, David Powner, director of information technology management issues at the Government Accountability Office; Henry Chao, deputy chief information officer for Medicare and Medicaid Services; Frank Baitman, deputy assistant secretary for information technology at the Department of Health and Human Services; Todd Park, U.S. chief technology officer at the White House Office of Science and Technology Policy; and Steve VanRoekel, U.S. chief information officer at the Office of Electronic Government in the Office of Management and Budget, are sworn in to testify before the House Oversight Committee about problems implementing the Obamacare healthcare program, on Capitol Hill in Washington, Wednesday, Nov. 13, 2013. (AP Photo/J. Scott Applewhite)

President Barack Obama has concluded that broken websites explain why so few Americans have signed up for coverage during the chaotic rollout of the Affordable Care Act.

Sticker shock may also be to blame.

Millions of consumers are learning that the law is designed to boost costs for some to subsidize others.

My best friend is one of the early losers.

A single woman of modest means, she’s being socked with a 65.5 percent increase in premiums starting in January for a “bronze” plan that covers slightly less than her excellent 2013 plan, which will be outlawed by the ACA.

She is not alone. A Manhattan Institute analysis of the Covered California insurance exchange found rate hikes for individuals in low-cost plans range from 64 percent to 146 percent.

When I owned a business, my customers celebrated the New Year by demanding — and usually receiving — lower prices and better quality.

My friend’s opposite experience raises the question of who is winning in ACA’s historic transfer of wealth.

So far, insurance companies lead the list, although gains may be fleeting.

Certainly, more uninsured people may someday get better access to health care, but many of them will just as certainly pay for the privilege.

Before I get into the details, I’ll note that this phenomenon of winners and losers is a hallmark of government policy, and relatively rare in markets.

Suppose you have an old car and need money. If I have money and need an old car, we are both better off after I exchange my cash for your title. It’s truly a win-win scenario.

When markets don’t deliver win-win transactions, economists call this a “failure.” Monopoly power is one example.

In contrast, governments usually create winners and losers.

If your tax goes up so that I can get a credit for insulating my house, I win and you lose. If my city tells me I can’t build a huge granny flat, my neighbors win and I lose.

This doesn’t mean any particular policy is good or bad, it just means that governments are mostly in the business of win-lose, while markets are mostly in the business of win-win.

The distinction explains why politics makes adversaries so nasty, yet business people go out for drinks after a tough negotiation.

But riches haven’t materialized, partly because ACA hit the industry with billions in new taxes and discounts.

Meanwhile, shares of insurance companies have been on a tear since the U.S. Supreme Court in June 2012 upheld most of the law’s provisions.

Aetna shares are up 60 percent this year. WellPoint is up 69 percent. Shares in laggard UnitedHealth Group have gained 39 percent, still beating the 31 percent gain for the S&P 500 Total Return index.

Nobody really knows why stocks go up or down.

Yet insurer stocks dipped early this year when the Obama administration threatened to cut reimbursements for Medicare Advantage, an industry cash cow. Stocks recovered when officials reversed themselves.